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Industrial Procurement & Designation of Sectors

Industrial Procurement & Designation of Sectors. Presentation to the UNIDO’s SPX RHYTHM Meeting 29 March 2012 Industrial Procurement Unit. Background. The NGP and IPAP identify the need to leverage public procurement

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Industrial Procurement & Designation of Sectors

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  1. Industrial Procurement & Designation of Sectors Presentation to the UNIDO’s SPX RHYTHM Meeting 29 March 2012 Industrial Procurement Unit

  2. Background • The NGP and IPAP identify the need to leverage public procurement • Support local manufacturing, especially in value added, tradable and labour intensive industries • Large public procurement has been conducted more on an ‘ad-hoc’ than ‘strategic’ basis • No medium - and long-term procurement plans • Little or no price advantage • Limited leveraging of domestic production

  3. Background • IPAP 2011/12 signalled commitment to overhaul procurement policy, legislation and practice: • Identify large strategic ‘fleet’ procurements for the development of long-term procurement plans and embed supplier development especially for SOE’s. • Revise the PPPFA to enable designation for local procurement and align B-BBEE and industrial development objectives • Revise the National Industrial Participation Programme (NIPP) • Strengthen the role of DFI’s for the promotion of local and regional content • The NGP process indicated need to secure commitments from social partners including procurement accord.

  4. Economic Challenge

  5. Regulatory reforms • Since the launch of IPAP2 in April 2011, the following regulatory progress has been undertaken • Amendments to the PPPFA Regulations in 2011 • Designation of sectors/sub-sectors/products effectively from 7 December 2011 • Finalisation of instruction notes for designated sectors • Research work on the designation of other sectors as envisaged in the Procurement Accord • Stakeholder engagement with other spheres of government and state owned companies/enterprises.

  6. Designated sectors The NEDLAC Social Partners aspire to achieve 75% localisation in the procurement of goods and services, both by the public and the private sectors

  7. Sectors planned for further designation • Pharmaceutical products • Set-top boxes • Schools and office furniture 2011 Procurement Accord Commitments • Electrical cables • Yellow metals • Other opportunities • Metal fabrication, capital equipment and transport equipment; • Green industries and components of the renewable energy generation build programme, • Boat making • Square kilometre array products • Big ticket items defined in government’s infrastructure delivery • Section 9.3 of the PPPFA Regulations provides for public entities to procure locally-manufactured products that are not on the list of designated products

  8. Designation of Industries & Sectors Local Content, Standardisation & Regulatory Development Industrial / Sector Research & Review Consultation & Stakeholder Management Gazette Regulations & Circulate Practice Notes Designation Process Flow

  9. Conditionalities & Commitments by the Private Sector • Agree to a minimum level of local content with subsequent increases over time • Decent work through bargaining council participation • Employment retention and creation • Increased exports • Productivity improvements • Industrial Upgrading • No anti-competitive practices

  10. Treasury Instruction Notes Bid invitations and conditions of contract • Specify local content requirements in the bid documents • Local content declaration certificate (SBD 6.2 / MBD 6.2) must form part of the bid Bid evaluation and award • Two stage evaluation process - first stage: Local content and functionality (if applicable) - Second stage: BBBEE and price • Disqualification - If local content declaration is not submitted - If local content threshold as set out by the dti or organ of state is not met Verification and Record Keeping - Random checks to be conducted - Records of supporting documents to be kept for 5 years

  11. Ongoing and further work for the unit • Finalise instruction notes for local procurement • Formula to calculate the local content , standards and guidelines to follow designated local procurement • Institutionalisation of the designation process/flow within the DTI • scheduling of meetings for the designation committee, • Timing of submission, • Instruction notes • Stakeholder management & training of officials on new PPPFA regulations • Monitoring & evaluation of the implementation of PPPFA & its regulations

  12. Footwear Analysis

  13. Footwear Contract Prices & Quantity Supplied

  14. Textile Output, GVA & Employment Trends

  15. Thank You

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